This week, the New Zealand Post Primary Teachers'
Association (PPTA) told this writer that teachers do not
really care about money; it is not their main motivation.
Indeed, New Zealand and international research shows that
people are not attracted to teaching for the money, but
rather to make a difference, because it is important for
society, for the challenge, to share their passion for the
subject, and to work with children and young people.

However, by the same token, research shows that money
helps to retain people as teachers. A 22-year-old straight
out of university with very little financial burden may be
pure in their altruism. Yet a 42-year-old saddled with a
mortgage who wants to provide a good life for a family may
well be enticed out of teaching by a better-paid job. More
so if the teacher is highly capable.

Currently, teachers
start on a base salary and move up incrementally each year
for eight years. The career model for teachers announced by
the Prime Minister in January will shatter the glass ceiling
at the top of the salary scale for classroom teachers. This
should go a long way to retaining the best.

But it does
not deal with another major problem. Virtually all teachers
(99 per cent) move up a notch on the salary scale each year,
which does reflect that, on average, the learning curve for
teachers is steepest in those first eight years. However, a
thought experiment may help illustrate why this does nothing
to encourage excellence.

Imagine that you are learning the
piano, and making a living as a pianist. You receive a fixed
yearly salary. Every year, you compete in a recital and your
placing in the competition determines the increase in your
salary. However, it does not matter how much you have
practiced, or how well you perform for your audience. Your
placing in the competition is fixed. The only variable
considered is how many years you have been playing. Pity for
the audience.

And a final point: if money really is
not important to teachers as the unions say, then why the
kerfuffle when you dare whisper those two words?

________________________________________Tertiary education too economic?Jenesa
Jeram | Research Assistant |
jenesa.jeram@nzinitiative.org.nzThis week, the
Ministry of Education – in partnership with the Ministry
of Business, Innovation and Employment – released their Tertiary Education Strategy for
2014-19. The overarching aim of the strategy is
to create better linkages between education and employment,
especially in ensuring the skills and competencies of
graduates meet the changing demands of the labour
market.

Most would agree that reconciling the
current mismatch between jobseekers and employers could only
be a good thing. However, the Green Party have criticised
the strategy for having “a single minded focus on economic
outcomes … out of step with the real issues facing New
Zealand”.

But can government policy ever afford
not to be economic? Given that tertiary education is
currently subsidised by the government, aversion to waste
should be a priority. And for tertiary education in
particular, government funding is significant. In fact, the
forecast government expenditure on tertiary education in
2014, with the inclusion of student support, is $4.15
billion.

The Tertiary Education Union has also
criticised the strategy, as it “…sees tertiary
education’s main role as simply providing a free, publicly
trained workforce and free publicly funded research to
private businesses.”

However, the accusation that
only private businesses benefit from a skilled labour force
ignores the extrinsic value to society, in the form of
greater productivity, increased economic growth, and less
dependence on the state. These gains are not just enjoyed by
the employer, but can lift the wellbeing of the wider
population.

And, of course, reconciling the supply
of graduates with the demand of employers is not just
economic. It also plays a role in addressing one of the most
salient issues facing New Zealand today: that of income
inequality and unemployment.

I have previously written on the
importance of tertiary institutions fostering a skilled
workforce, not only to meet the demands of employers, but to
ensure all people are able to participate in the future
labour force.

Higher education has long been
considered a means of increasing social mobility and
reducing income inequality. In fact, in a 2009 Statistics
New Zealand study, the median earnings of bachelor's degree
graduates were about 40 per cent higher than non-degree
holders, three years after graduating. In the future, it is
likely that the increased demand for skilled labour will
only exacerbate inequality between skilled and unskilled
workers.

Everyone should have the opportunity to
develop their human capital, participate competitively in
the workforce, and better their lot through higher
education.

The relationship between tertiary
education and the labour market is not simply a matter of
economics. It is a matter of giving individuals a sense of
pride, purpose, and self-worth through meaningful, well-paid
employment.

________________________________________‘B’
is for banking (central)The ABC of Economic
Literacy | info@nzinitiative.org.nzIt is a wonderful
convenience to be able to buy almost anything we want,
offering nothing in exchange but flimsy paper or an
electronic claim on our bank account. We experience this
convenience every time we go to the supermarket and pay by
cash, ATM or credit card.

The entire system depends on the
seller’s confidence that the means of payment being
offered is of real value. Counterfeit cash, or fraudulent
ATM or credit card transactions potentially undermine every
honest person’s ability to transact.

For most of human
history, confidence has been greatest in coins made of gold
and silver. Ancient rulers who secretly debased their coins
cheated their people and eroded that confidence.

Today,
we transact in a world of monopoly government paper money,
backed only by trust in government. Like the rulers of old,
today’s governments can cheat their people by creating
unanticipated inflation through issuing too much paper
money.

The diverse interest rates paid on borrowings by
banks and governments illustrate how confidence varies in
the value of each issuer’s promise to pay future interest
and principal. Higher interest rates mean higher risk.

The
modern government-controlled central bank is banker to the
major commercial banks. It accepts their deposits (which
count as banking system reserves) and may lend them money or
buy some of their assets when they need more cash. The
perceived soundness of a commercial bank depends, in part,
on its perceived central bank support.

The soundness of a
commercial bank also depends on the quality of its loans,
the degree to which it matches deposit and lending risks,
the level and quality of its reserves, and the financial
strength of its major shareholders.

In contrast, the
soundness of a central bank is dominated by the
government’s ability to inject more taxpayer money into it
when needed.

Governments may oblige central banks to lend
unwisely, perhaps by forcing them to fund government
deficits, or perhaps to support institutions that have made
bad loans in a politically ‘worthy’ cause, such as
housing loans to uncreditworthy borrowers.

Such situations
can easily induce booms and crashes, banking crises and
prolonged unemployment.

These roles and pressures place
heavy responsibilities on central bankers. They stand at the
apex of the confidence pyramid and play a pivotal role, for
better or for worse, during any general banking
crisis.

Central banking has mystique, but no magic wand.
It cannot insulate the public from the consequences of
collective fiscal and financial follies.

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